European Stocks to Open Mixed; Eyes on Banks

European stocks were indicated to open mixed on Thursday, after seeing their worst monthly close since October 2008 on Wednesday.

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Opening calls from IG Markets showed the FTSE down 7 points, the DAX falling by 12 points but the CAC up 14.

August was a bad month for stocks, with all the major indices down significantly as investors sold off heavily on fears of another recession.

The British Chamber of Commerce downgraded its forecast for the UK economic growth and said interest rates are likely to stay low until 2012, while public debt was seen higher than government predictions.

At 9 am London time, euro zone manufacturing PMI will be released, with a raft of data in individual countries in the area coming before that.

In a draft version of it Global Financial Stability Report, the International Monetary Fund circulated estimates showing serious damage to European banks' balance sheets because of their holdings of bonds from troubled euro zone countries, sparking fierce debates with authorities in the area and with the European Central Bank, the Financial Times reported.

Spain will test the market's appetite for its debt on Thursday, in the hope that bond-buying by the ECB will lower its borrowing costs. The country will sell between thee and four billion euros ($4.4-5.8 billion) of a new five-year bond, at its first auction since Aug. 4, when it placed two short-dated bonds and yields rose to close to their highest levels since 2000.

Brazil surprisingly slashed its interest rates by half a percentage point to 12 percent, reflecting increasing worries about a global slowdown.